Grant Thornton has told regulators that it intends to quite as Sport Direct’s auditor following concerns over the disclosure of a €674m tax bill, a move that would attract more scrutiny on to the corporate governance of Mike Ashley’s business.
The company which has audited Sports Direct since it floated on the London Stock Exchange in 2007, is set to resign after the troubled retailer’s annual general meeting in September.
Grant Thornton’s one of the largest listed audit clients was only informed by the retailer of the significant tax liability just hours before it was due to sign off its annual accounts.
The resignation could leave one of the UK’s most high-profile listed companies struggling to appoint another auditor after it admitted in its annual results last week, that it had not persuaded rival accounting firms to tender for its audit contract.
The retailer’s shares dropped sharply yesterday after the tax disclosure debacle late last week, alongside concern over trading in its earnings by 10 hours and eventually revealed the reason for the delay was a €674 Belgian Tax demand that came at the eleventh hour.
Grant Thornton is under scrutiny from the audit regulator for its work for Sports Direct. The FRC is investigating why Grant Thornton did not disclose payments made by Sports Direct to a company run by Mr Ashley’s brother as a related party transaction in the accounts. The FRC’s audit quality review team is also looking into how Grant Thornton valued Sport Direct’s holding in Debenhams prior to its near collapse in June.